RMB exchange rate to be stable in 2015: CICC

“Despite the weaker spot exchange rate of the Renminbi against the dollar, the appreciation of the central parity rate highlights the People’s Bank of China’s (PBOC) policy intention to stabilize the exchange rate,” said the report.

China recorded a current account surplus of $152.7 billion in the first three quarters of 2014, which represented 2.2 percent of the GDP. The figure is expected to rise further to 3 percent in 2015, according to CICC.

China also recorded a large capital account surplus of $68.7 billion over the first three quarters of 2014. With China’s economic risk falling, it is expected that the country will continue to run a capital account surplus in 2015. Twin surpluses should help support the Renminbi exchange rate against the dollar, said the CICC.

CICC forecast that the central parity rate for Renminbi against the dollar will be 6.13 at end-2014 and the spot exchange rate 6.22. The central parity rate is expected to be 6.11 at end-2015 and the spot exchange rate to be 6.20.

The value of the Renminbi weakened by 19 basis points to 6.1205 against the US dollar in its central parity rate on Dec 29, according to the China Foreign Exchange Trading System.

In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day. The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.